Our tax and law office assists clients from the European Union and
European
Economic Area (EU / EEA) as well as in many other couries (e.g.
Switzerland, Russia, U.S.A, China) with the realization of their online
gambling. On behalf of our clients we incorporate companies with
gambling-licences in many countries such as Malta, Gibraltar, U.K.,
Costa Rica, Antigua and Barbuda and Kahnawake. Further, we advise you in
tax planning and tax-free routing of dividends e.g. by setting up a
holding.

In the process of incorporating gambling company and obtaining a
gambling licence we offer all relevant services:

Incorporation of the company, including
Registered Office proper place of business

If necessary or ordered: Trustee Director (place
of establishment in terms of place of taxation)

Apply for licence, business-plan, profit and loss
statement

On request: connection to software company for
gambling-software

Gambling regulation, draft of general terms of
trade according to national Gambling Act

Server hosting in the jurisdiction at your place
of business of the company

Connection to tax advisory firm at the place of
business (bookkeeping, annual account & return, advance return for
VAT, matters on gambling taxes)

Choosing the right jurisdiction, several key factors are important.
Depending on these factors we kindly ask you to answer the following
questions in order to reduce the number of possible jurisdictions:

Where do you reside, where do you usually live?

Where do the shareholder(s) of the proposed
Gambling Company reside, where do they usually live?

To which customers in which countries shall the
gambling be offered?

Shall the gambling be offered to residents in the
European Union also?

Will the gambling be offered on you own hosted
platform o rare you going to offer it as a reseller /affiliate ie.
will your games would be hosted by a company that already has a
gambling licence?

I fit is a reseller program, of which country
does the licence origin?

If Lottery of goods or real estate: where is the
real estate located? The following has its
focus on EU-legislation respectively on gambling-licences within the
European Union. But further, we have the experience with the
application of gambling-licences outside the EU and EEA or from
clients abroad (e.g. Switzerland, Russia, U.S.A, China).

Please, have close look at the following:

By offering gambling the legislation of the
country applies where the company has its proper place of management
but also the laws of those countries, to where the gambling is
addressed.

In most countries – such as China, Switzerland or
China – gambling is prohibited, reserved to government bodies or
regulated.

Within the EU and the EEA the Freedom of
Establishment and verdicts of the European Court of Justice apply.
By this, companies on Malta holding a gambling-licence may offer its
range of games to all European Union without a new licence in those
other countries in the EU abroad Malta. This fact about a Maltese
licence is also important and very interesting to clients from other
countries. To offer our clients from non EU/EEA-countries with
strict gambling-legislation an attractive way to implement a
gambling-licence, we have several arrangements. Please have a look
at our remarks below.

In some Internet forums one can read entries
which state, for example, that a license can be purchased in Malta for
approximately 7,000 Euro per annum.This is of course
total nonsense; one cannot just develop a lucrative business
"on-the-fly".He who wishes to be a
successful entrepreneur must make certain investments.The
following fees and taxes must be considered when pursuing a gambling
license:

- Preparatory steps regarding the submittal of
the approval process at the relevant agency in the seat country (these
services are provided by our partner attorneys in the seat country).For this process numerous documents/proofs must be submitted depending on
the seat country:Business plan and profit and loss plan for the
first years, software, general terms and conditions of the gambling
operation, measures for child and youth protection as well as addiction
prevention, excellent credit record of the managing director, sufficient
paid in capital in the event of distributions and many more
considerations.

-Approval process / accompaniment up to
receiving the license

-Formation of a company in the seat country, no
bogus firms [as defined by term/act/provision]. In this process, for
example, Gibraltar mandates a commercially structured organization.

- Government fees to be paid to the relevant
agency in the seat country, gambling taxes, corporate/company taxes

Within the context of Internet gambling or betting offerings one must
first differentiate if the client only acts as an "agent", i.e. as a
reseller of existing web offerings or if the client wishes to realize
its own platform/service.
In the event a client wishes only to pursue "reseller activities", in
this case the client could, for example, form a Cypriot Limited which
offers such services.
It is true that gambling is illegal in Cyprus, however, reseller
offerings are legal.
In the event the client wishes to offer its "own offering" the laws of
the target countries must be considered. Of course the domestic laws of
the respective seat state must also be taken into account.Within the EU the a license can be obtained in an EU state (for example
Malta), and that said license must , under certain conditions, be
recognized by the other EU states. The legal basis for this opportunity
is the effect of the EU freedom of establishment and the judicial
decisions of the European Court of Justice
The situation can become legally problematic, if the offering is to be
made available to customers in different countries, also outside of the
European Union.
If a license is realized in a EU state (for example in Malta), then one
must consider that the only applicable law is the law of the seat
country and that no permanent establishment exists, as defined by an
applicable double taxation agreement.
This could lead to the application of the target country’s domestic law,
which as a rule should be avoided., Consequently, at most only a
representation may be installed "in other countries outside of the seat
country" (no permanent establishment as defined by a an applicable
double taxation agreement, only consulting activities).Based on different legal considerations we however are inclined to
recommend against maintaining any connection to a target country, for
example Germany or Austria (as a rule the seat country of the
beneficiaries).

To operate an online
casino, poker room or sports betting gaming site legally you will need
to obtain a gambling license first. The actual gambling license to
operate online gaming site is issued by many governments worldwide, but
the most popular jurisdictions issuing such offshore gambling licenses
are from the Caribbean and Pacific Island Governments such as Antigua
and Barbuda, Costa Rica, St Kitts, Dominica, Curacau and Vanuatu. When
selecting a gambling license jurisdiction, you should select one with a
sensible approach to taxation, and license cost in combination with a
strong licensing law and technical standards.

Why do
you need the gambling license for your online casino, poker or sports
betting site?

It is possible to
make your online gaming business without a license, but most of major
online casinos have license. Here are three main causes why it is worth
to have a gambling license.

In player's opinion gambling license guarantees
reliability and straight dealing of the gaming company. Players have
more confidence playing in casinos and poker rooms with license.

In case of a settlement account opening banks
insist on gambling license and especially while concluding
agreements for receiving payments from bank cards.

In many countries operating a gambling business
without a gambling license is illegal and it may result in
termination and criminal responsibilities.

You can apply for a gambling license in
one of the countries listed below:

Antigua and Barbuda

Antigua and Barbuda is a twin-island
nation located in the Eastern Caribbean. Antigua and Barbuda was one of
the first jurisdictions to license interactive gaming and wagering
companies in 1994. The internet gaming companies are classified as
“Financial Institutions” and are subject to all the Anti-Money
Laundering (AML) and Caribbean Financial Action Task Force (CFATF)
requirements of the jurisdiction.

The licensing and regulation of online
gambling services on the islands of Antigua and Barbuda is handled by
the Financial Services Regulatory Commission's Division of Gaming. The
FRSC Gaming Division awards two types of licensees: interactive gaming
and interactive wagering.

The gaming license is for casino and
poker sites and the wagering license is for sports betting sites. It's
one of the offshore jurisdictions which contain the biggest number of
registered online casinos.

For more information on Antigua's interactive gaming
and wagering laws and regulations see the following:

The Antiguan gaming
regulations are enforced by the Antiguan Directorate of Offshore Gaming
(the “Directorate”). For more information on obtaining a gambling
license in Antigua and Barbuda please visit
www.antiguagaming.gov.ag

Costa Rica is the Mecca of online
casinos and poker rooms because it has the best infrastructure available
in the Caribbean basin - its reliable telecommunication system, its
multilingual workers, and its lack of online gaming and Internet
regulations. A lot of online casinos have chosen Costa Rica as
registration country because of the fact that there are no direct
prohibition on gambling business and no necessity to receive a special
license.

There is no online gambling
license in Costa Rica.A company
incorporated under the laws of Costa Rica can operate an online gaming
business. Companies operate under a "data processing" license.

Costa Rica is home to 200+
online gambling companies, without a legislation specifically dealing
with gambling over the Internet.Legislation
does exist to restrict land-based gambling, but these laws are not
interpreted as extending to Internet gambling.

The Kahnawake Gaming Commission is an
organization that licenses a large number of online casinos and online
poker rooms. The Kahnawáke Gaming Commission was established in June
1996. The Commission is empowered to regulate and control gaming and
related activities within and from the Mohawk Territory of Kahnawáke.
These gaming activities are regulated in accordance with the highest
principles of honesty and integrity.

The fee for the initial application is C$15,000 plus
an annual license fee of C$10,000

Panama

Panama adopted
regulations governing the licensing of electronic games of chance and
wagering activities in late 2002. Internet gaming companies domiciled in
Panama enjoy complete tax exemptions. Customs duty concessions are given
for imports needed to carry on Internet gaming. As long as the income
made from Internet operations are to jurisdictions outside of Panama,
there is no income tax, withholding tax, sales tax or VAT taxes.
Offshore companies, such as online gaming companies are not subject to
foreign exchange control. There is also a new call center incentive and
training program that boast numerous qualified bilingual workers.

The regulations
allow master licenses to be granted that are valid for up to seven years
upon payment of a license fee of US$40,000. There is also an annual
license fee of US$20,000. Master license holders may grant sub-licenses,
which are subject to the annual fee. Applicants must pay all
investigation costs incurred in the processing of the application.
Operators must comply with money-laundering regulations and notify the
Financial Analysis Unit of any suspicious transactions above US$10,000.
An account must be maintained to guarantee payment to winners. Until now
a very few companies have applied for the license, mainly due to the
huge paper work and the cost of the gambling license.

Antilles Netherlands
and Curacao

Within the Netherlands Antilles, Curacao offers
gambling licenses for online casinos, poker rooms and sportsbooks.
Gambling licenses are available through the Department of Justice or
through sub-licensing from an existing gambling license holders.
Licenses from the Department of Justice last for two years.

Gibraltar

All gaming operations in Gibraltar
require licensing under the Gambling Ordinance 2005. Remote Gambling
licenses, including for telephone and internet betting, are issued by
the Government of Gibraltar.

Only companies with a proven track
record in gaming, of reputable standing and with a realistic business
plan can be granted gambling licenses. Gibraltar gaming licenses are
generally difficult to obtain.

The Isle of Man
specifically encourages the location of online gambling businesses: "The
Isle of Man Government actively encourages the development of gambling
and e-gaming business on the Isle of Man. It remains committed to
delivering a stable government and strong regulatory environment,
supported by a wide range of attractive Business Benefits."

The Commission requires
independent testing of software to ensure games offered are not rigged
and will make accurate payment of player winnings. Games may only be
offered by licensed, corporate operators. All operators must also
establish bond arrangements to guarantee players will be paid in the
event the licensee ceased operations for any reason.

Fees

GBP35,000 per annum

GBP1000 one off administration fee
which is non-refundable

Duty

for gross gaming yield not
exceeding £20 million per annum 1.5%

for gross gaming yield of more
than £20 million per annum, but not exceeding £40 million per annum
0.5%

Licences are issued for a minimum period of five years and may be
extended for further periods of five years each.

Licensing Requirements

Obtaining a gaming licence in Malta is a serious affair and in the
interest of the consumers and the local reputation, the Authority would
require to know that the applicant can meet the licence obligations. The
licensing procedure is quite extensive but thanks to the professionalism
of the persons involved, this procedure should not take more than 5 to 6
weeks.

The application for a gaming licence requires the following
documentation:

1. Detailed profile of the promoting company

2. A copy of the last audited accounts of the promoting company, where
applicable

3. A business plan indicating the economic activity – including job
creation if any – which will be carried out from Malta

4. A plan of the premises earmarked for adoption as a call centre.

5. Personal details of all shareholders having more than 5% interest in
the local operations.

Basic Requirements

• Both hardware and software involved in the
operations must be located in Malta, and there exist companies that can
provide this service without the need for the licensee to obtain its own
premises.

• The activities of the International Trading Company are limited to
those carried outside Malta. No Maltese resident is permitted to place
bets with such a company.

Licence Fees

On submission of application form – Lm1,000
(US$2,700) for any class of remote gaming licence.

On Issue of any Remote Gaming Licence – Lm3,000 (US$8100) per annum.
Such a licence is normally issued for a 5 year period.

On application for renewal of any Remote Gaming Licence – Lm500
(US$1,350)

Taxation

On online gaming – Lm2,000(US$5400) per month
for first six months and Lm3000(US$8100) per month for the entire
duration of the licence period.

On Class 4 Licences – Lm0.0 (NIL) per month for first six months and
Lm1,000(US$2700) per month for the next six months and Lm2000(US$5400)
per month for the remaining period of the licence.

Online betting operations – one half of one per centum (0.5%) on the
gross amounts of bets accepted

Online betting exchanges – one half of one per centum (0.5%) on the
sum of all net winnings calculated per player per betting market.

Online pool betting – one half of one per centum (0.5%) on the
aggregate of stakes paid.

Provided that in no case will the maximum of tax payable per annum by
any licensee in respect of any one licence, exceed Lm200,000.

Company Registration

A Malta based gaming operation must be carried out by
a Malta registered company as specified in Regulation 4 of the Remote
Gaming Regulations (LN176/2004). Gaming companies are not subject to any
special tax regime. In fact, online gaming operations may be carried out
through a normal limited liability company registered in Malta under the
Companies’ Act.

Taxation of Online Gaming Companies

Companies registered on or after 1st January
2007 are taxable at the rate of 35% however, shareholders are entitled
to claim back a 6/7ths refund of the Malta tax upon distributions of
profits. Alternatively, shareholders may claim a 2/3rds refund of the
tax payable in Malta.

In addition, Malta does not levy withholding tax on any outbound
distributions of dividends. The refund system and the absence of a
dividend withholding tax ensures that profits derived by gaming
companies are taxed and repatriated outside Malta in the most efficient
manner.

EU Laws

The EU presently does not regulate gambling and
in accordance with the EU principle of solidarity, EU member states are
free to regulate the matter at a national level. In fact the EU welcomes
Malta’s approach to attract and regulate the online gaming industry.

In a number of test cases, the European Court of Justice has held
that the Treaty of Rome applies to the sector since online gaming is
classified as a service and therefore guaranteed by one of the four
freedoms enshrined in the treaty of Rome.

An important aspect to remember is that in order to benefit from the
application of the Internal Market Principles and provide cross border
services within the European Union one should be established in the EU.
Malta, being an EU member since 1st May, 2004, offers such an
opportunity which few other e-gaming jurisdiction can match.

What Malta Offers

Fiscal Benefits

• Low taxation on gaming operations in Malta
• Tax leakage in Malta may be as low as 5%
• A wide network of double taxation agreements

Other Advantages

• A sound legal and financial system
• A sound ICT infrastructure
• Legislation on betting and e-commerce
• Strong regulatory bodies
• A solid international reputation
• Skilled work force
• Low cost of doing business
• State of the Art telecommunications facilities
• An internal market of circa 500 million EU citizens.